Nearly a quarter of people would be unable to find £200 at short notice, new research shows.

One in six admit they would have to borrow the money, with a further 8% saying they simply could not pay, according to data published in an annual financial-state-of-the-nation report by academics.

And most people continue to cut back on their spending, despite recent signs of recovery for the economy.

The latest Financial Inclusion report from the University of Birmingham, released today (18 July), finds that while those at the top of the pile are seeing marked improvements in their financial situations, things are getting worse for people at the bottom.

Among the findings in this year’s report are:

  • Thirty-eight per cent of people are still finding it difficult to cope financially or are only just getting by – a slight decrease year-on-year
  • The majority of the population (57%) is still reducing its spending, with one in 10 manual workers cutting back on basic food items
  • There has been a dramatic increase in the use of food banks, from 61,000 people in 2010-11 to just under one million in 2013-14
  • Means-tested benefits for an out-of-work single person in 2014 only provide 39% of the income they would need for an acceptable standard of living (57% for a single parent with one child or a couple with two children)
  • There were still more than 2.3 million people out of work in the UK at the end of 2013, although this is down from the peak of 2.7 million in 2011
  • Almost two-thirds of households have some form of unsecured credit, with a quarter of the population owing more than they have in savings
  • Nearly one in five people with debt find it a ‘heavy burden’, and borrowing is up overall
  • Repossessions have increased, with more tenants facing actions by landlords
  • The amount of money people are saving has gone up slightly

The report says: ‘Economic growth has returned to the UK in the last year, and we can already see a few positive signs of greater financial security for some. Those in secure jobs and with higher incomes are saving more and have some spare money when in need. But the majority are still having to cut back on spending, and many in the lowest income groups are borrowing and struggling more. The recent welfare reforms look set to have a particularly negative impact on the poorest in coming years, and we may already be seeing the impact of this with the increase in social landlord claims for possession.

‘It will take many years to make up the ground lost during the longest and deepest slump in a century that we have just experienced. The situation, in fact, looks set to worsen still further for many low and middle-income groups in coming years without changes in social security policy and more action to increase job security and wages.’

Report author Karen Rowlingson, Professor of Social Policy at the University of Birmingham, said: ‘We are experiencing a three-speed recovery. A lucky minority at the top are steaming ahead, benefiting from the current low interest rates and the return to growth to increase their savings, while those in the middle are standing still, finding things difficult but to some extent adapting to more austere times. Those at the bottom are going into reverse, really struggling and getting further into debt.’

Co-author Stephen McKay, Distinguished Professor of Social Research at the University of Lincoln, added: ‘Economic growth has returned, but increases in interest rates are likely and this will hurt those owing money, while many changes to welfare benefits will only start to show up in the data in the coming months. Fewer people report the most severe problems, but many remain vulnerable to small changes in commitments and their employment opportunities are often insecure.’


For more information or to arrange an interview, contact Stuart Gillespie in the University of Birmingham press office on +44 (0)121 414 9041. Out of hours please call +44 (0)7789 921165 or email the Press Office.

  • The Financial Inclusion Annual Monitoring Report 2014 (PDF - 2.42Mb) is the second in a series of five annual reports on financial inclusion from the University of Birmingham. 
  • The study was carried out by Professor Karen Rowlingson (Professor of Social Policy, University of Birmingham) and Professor Stephen McKay (Distinguished Professor of Social Research, University of Lincoln).
  • The research was funded by the Friends Provident Foundation and was carried out in three main stages: stakeholder engagement; secondary analysis of existing data sources; and a module of questions on an Ipsos/MORI omnibus survey in both 2013 and 2014.